Can You Receive Both Social Security Disability and ERISA Benefits?

If you are disabled, if you are unable to work, and if you need to receive disability benefits, start by having a discussion with a California disability benefits attorney. The right attorney will know what disability benefits you are eligible to receive and will help you obtain those benefits.

What help may be available to someone who suffers a disabling injury and is no longer able to work? What steps do you have to take to be approved for disability benefits? And what are your options if the benefits that you believe you are eligible for are denied to you? Do ERISA long-term disability plans reduce their benefit payments to insureds if they receive other types of disability benefits?

If you continue reading this brief discussion of disability benefits, these questions will be answered, and you will also learn where to find the help you may need if you are disabled and you are seeking to obtain long-term disability benefits.

What Programs Provide Disability Benefits?

When people say that they are “on disability,” it usually means that they are receiving any of the following benefits or some combination of these benefits:

Veterans’ disability compensation
State disability income
Social Security disability insurance
Private individual disability insurance
Group long-term disability insurance
Worker’s Compensation disability

These are different programs that provide financial assistance to disabled persons who cannot work at all or who cannot work full-time at their occupation or at any occupation. If you are disabled, it is important to know which benefits you are eligible for and how the programs work alone or in combination. It is more complicated than you may think at first.

What is Social Security Disability Insurance (SSDI)?

If you become disabled, you may apply for Social Security Disability Insurance (SSDI). You will need to have enough work credits, and you will have to satisfy the stringent disability standards set by the Social Security Administration (SSA).

The number of work credits you must have in order to receive SSDI benefits depends on your age when you become disabled. Most workers will need forty credits, but in some cases, younger disabled workers with fewer credits may also be eligible for SSDI benefits.

You also must demonstrate to the SSA that you have a severe medical impairment by providing test results, imaging, and other medical records as evidence of the diagnosis and symptoms that define your disability.

What is ERISA and How Does it Apply to Long-Term Disability Claims?

If you have purchased long-term disability insurance through your employer, you may also file a claim for those disability benefits. Employee benefits are governed by the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA is the federal law that sets the standards for most retirement, health, and disability plans offered by private employers. A California disability benefits lawyer who handles ERISA claims can help you with an ERISA disability claim or help you file an appeal if your claim is denied. It is too long of a discussion to outline all of the ways ERISA may impact your long-term disability claim. There are numerous ERISA rules and regulations that impact your claim and you should consult an ERISA disability claims attorney to help you navigate these rules and regulations.

If Your ERISA Disability Insurance Claim Is Denied, Then What?

ERISA disability insurance claims are denied more often than they are paid. That means your claim will likely be denied by insurers who put profit first in evaluating whether to pay claims. If your long-term disability claims is denied, ERISA rules require you to appeal a denial of long-term disability benefits directly with the insurance company, in accord with the wording of your policy, before you may sue the company over a denial of your benefit claim.

ERISA plans give you 180 days to appeal a denial of disability benefits. Some plans require two appeals before you may file a lawsuit. In any of these situations, you should have a disability benefits lawyer handle the appeal on your behalf.

It is faster (and sometimes easier) to receive disability insurance benefits from an insurer than it is to receive SSDI benefits. However, some disability insurance policies require you to apply for SSDI before a specific deadline, and if you are approved for SSDI, your insurance payout will be reduced.

How and Why Can Someone’s ERISA Disability Benefits Be Reduced?

ERISA plans almost always provide for offsets or deductions from the standard disability benefit owed under an LTD policy for certain types of disability benefits. This means that an insurance company may reduce the payout amounts in order to “offset” and recover any overpayments.

That is how insurance companies can shift their disability payout obligation to Social Security. In addition, LTD policies will often provide for offsets for benefits received from state disability income, other group long-term disability insurance, and worker’s compensation disability.

How Can You Know You Are Receiving the Right Benefits?

If this sounds complicated, it is. To make sure that you are receiving the benefits that you are legally entitled to receive – and to stay compliant with ERISA and Social Security rules – you may need the advice and services of a California disability benefits attorney. Your attorney can:

determine which benefits you qualify to receive and when to apply for those benefits
guide you step-by-step through the application process for disability benefits
ensure that your application forms and additional paperwork are accurate and complete
take legal action on your behalf to obtain the disability benefits that are rightfully yours
advise you as to what offsets are proper and in what amounts

Why Might Your ERISA Disability Benefits Be Denied or Terminated?

Even if the SSA has approved your application for SSDI benefits, you may still be denied ERISA long-term disability insurance benefits under your long-term disability policy.

It is the insurance policy’s definition of a disability that will determine if you qualify for long-term disability benefits. You should read – and you should be certain that you understand – how your ERISA long-term disability insurance policy works.

For example, in many long-term disability policies, the definition of a “disability” changes after the first 24 months that you are disabled. Your plan might pay disability benefits for the first 24 months because you can no longer work at your “own occupation.”

But after 24 months, the policy may change the definition of disability if you can work at “any occupation” – a more restrictive definition. Disabled persons may be surprised to learn their disability benefits may end after two years because of the changed definition of “disability.”

How Do California Courts Handle Denials of ERISA Claims?

ERISA rules and regulations often tend to favor insurance companies. In some states, a court will only order an insurance company to pay a denied claim for ERISA disability benefits if the court determines that the denial was “arbitrary and capricious.” In other states, a “de novo” standard of review will apply, which is much more favorable to insureds/employees.

California courts in most situations apply a the “de novo” standard of review, in which the judge simply determines if the insurance company was wrong or right when it denied a claim without giving deference to the insurer’s decision. ERISA rules and regulations are complicated and the courts will apply these ERISA rules and regulations to decide the outcome of your disability claim. That’s why, if the long-term disability benefits that you believe you are entitled to under ERISA are delayed or denied, you should obtain the advice and services of a California disability benefits lawyer as quickly as possible. Whether you receive disability benefits is often dependent on hiring an experienced ERISA disability claims attorney like McKennon Law Group PC.

Insurance companies often base denials of disability claims on the mere review of the available documentation in the existing claims files. It is cheaper for them to do so and by using their own paper reviewer, they reduce the risk of an unfavorable report after completion of a significantly more expensive independent medical examination. By carefully selecting the paper reviewers, the insurance companies can obtain some “evidence” of a basis for denial of claim benefits. But how much value do such reports have, particularly if they conveniently fail to address substantial evidence of disability in the reports of the claimant’s treating physicians in the claims file?

In a recent disability benefits decision involving Unum Life Insurance Company (“Unum”), Rios v. Unum Life Ins. Co., 2020 WL 7311343 (C.D. Cal. Dec. 10, 2020), the court reviewed the denial of a disability claim under a de novo standard of review and determined that the claimant was entitled to disability benefits.

Claimant Yolanda Rios worked as a User Support Specialist for large national law firm, Arnold & Porter Kaye Scholer, L.L.P., until she made a claim for disability benefits with Unum. Claimant’s specific job at Arnold & Porter required constant sitting as well as intense concentration and logical thinking. Her Regular or Usual Occupation in the national economy required “constantly sitting” for more than 5.5 hours in an 8-hour day, and it required “focus and concentration.” Rio’s primary disabling condition was “back and leg pain (sciatica) related to multi-level degenerative lumbar disc disease, stenosis, radiculopathy, and ‘severe disc narrowing at L4/5.’” Unum initially approved and paid long-term disability benefits based only on her anxiety and depression and not on any physical impairment, but Unum agreed to further evaluate her physical complaints.

Unum based its denial on a “paper review” of the records which arbitrarily failed to adequately address the claimant’s own testimony regarding pain. The medical reviewer ignored substantial evidence of “excess pain” throughout the claimant’s medical records. Unum had the opportunity to medically examine the claimant and chose not to do so while knowing of the evidence of Rio’s significant pain in the medical records. The court’s disability finding was further supported by the Social Security Administration’s determination that the claimant was “less than sedentary” and, therefore, disabled from “any gainful occupation.” Although the favorable SSA ruling was not dispositive, the court, following applicable Ninth Circuit precedent, found it to be relevant.

The Rios court criticized Unum’s paper review because it conflicted with substantially all the medical evidence, and it faulted Unum for failing to conduct a medical examination of the claimant. The court held that Rios was disabled under both the “own” and “any” occupation standards and faulted Unum’s reviewer for numerous misstatements and inaccuracies. It noted that at least five treating doctors or health care providers had documented that she was taking drugs that affected her concentration, that she had memory problems and that her muscle relaxant did not allow her to work. Because her current job required the ability to focus on a task for some length of time and the ability to use reasoning consistently in her regular and usual occupation as required in the national economy, Rios was disabled under both standards.

The court found that Unum arbitrarily discredited Rios’ testimony of her pain, and her testimony was supported extensively in the medical records. And, Unum did not bother to conduct its own medical examination of the claimant. Unum’s failure to do so “‘raise[s] questions about the thoroughness and accuracy’ of its benefits determination.” Rios, 2020 WL 7311343, at *3, citing Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623, 630, 634 (9th Cir. 2009). The court was skeptical of the opinions of Unum’s non-examining experts because it found that the opinions of the examining physicians were “entirely one sided in favor of [Plaintiff’s] claim.” Rios, 2020 WL 7311343, at *3, citing Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 676-679 (9th Cir. 2011).

Rios is instructive in demonstrating the relative lack of evidentiary value a court should attribute to such one-sided paper reviews. The ruling recognizes that the insurer had the opportunity to obtain better evidence of the actual current condition of the claimant through a medical examination, and that the insurer should not benefit from its failure to engage in such examination. And, of course, one-sided paper reviews that completely fail to consider abundant evidence of disability are entitled to little, if any, consideration. In addition, Rios underscores the need for claimants to supplement the evidence in the claim file with additional favorable evidence. In particular, Ms. Rios benefited from the supplementation of the record to include the approval of her SSA benefits, which approval occurred after her claim was submitted and was, therefore, not available for consideration at the time of the insurance company’s denial of benefits.

The involvement of skilled ERISA attorneys can make an important difference in the likelihood of a favorable outcome in these matters. McKennon Law Group PC focuses its practice on assuring the most favorable presentation of such reasonably available evidence to the court and the opposing party. Its expertise in handling these matters can be seen in the numerous rulings in favor of claimants. If you believe that an insurance company or benefits administrator has unfairly handled your claim for disability benefits, we urge you to contact us for a free, no-obligation, case evaluation. Let us see what we may be able to do to help you get the benefits you deserve.

National Football League (“NFL”) players are covered by an employer-sponsored long-term disability (“LTD”) policy called the Bert Bell/Pete Rozelle NFL Player Retirement Plan (“Plan”). This NFL Plan, like most employer long-term disability plans, is governed by ERISA. Therefore, disabled NFL players face many of the same evidential challenges as company-bound employees when filing a claim for disability. These similarities are evidenced in the recent decision, Dimry v. Bert Bell/Pete Rozelle NFL Player Retirement Plan, 2020 WL 5526607 (N.D. Cal. Sept. 15, 2020)(“Dimry”). The court held in Dimry that Plan administrator (“Bert Bell”) abused its discretion when denying Mr. Dimry’s disability claim primarily for the following reasons: (1) Bert Bell did not provide Dimry with a “full and fair” review; (2) Bert Bell demanded “objective evidence” which was not required by the Plan; and (3) Bert Bell failed to consider Mr. Dimry’s Social Security award.

Dimry originally filed a complaint against Bert Bell to recover LTD benefits in 2016. Shortly after, the Social Security Administration (“SSA”) found that Dimry had been disabled since 2012. The district court found that Bert Bell had abused its discretion when it denied Mr. Dimry’s LTD claim because it ignored two reports from Mr. Dimry’s treating physicians in favor of two so-called “neutral physicians” who were paid almost $300,000 by Bert Bell to review claims. The district judge found in favor of Dimry finding Bert Bell had abused its discretion since the denial of Mr. Dimry’s benefits claim was “based upon an unreasonable bias in favor of Plan-selected physicians” and remanded the matter to Bert Bell to re-evaluate Mr. Dimry’s disability claim. On remand, Bert Bell relied on the Plan’s medical director, Dr. Jackson, who opined that Mr. Dimry’s primary impairment appeared to be pain and subjective complaints that were not supported by objective evidence. Relying on Dr. Jackson’s report, Bert Bell again denied Mr. Dimry’s claim. Another lawsuit followed.

Dimry first argued that there was a conflict of interest because the three physicians who had reviewed his claim were biased since the first two physician reviewers had been paid almost $300,000 and Dr. Jackson had been paid $223,000 by the Plan. The court explained that “Even apart from any issue preclusion that may apply given the Dimry I court’s findings, under Demer ‘[t]he magnitudes of these numbers, particularly when combined, raise a fair inference that there is a financial conflict which influenced the [the physicians’] assessments.’ Demer, 835 F.3d at 902.”

Dimry next argued that he was excluded from Bert Bell’s “review of his claim following the remand in violation of the requirement that there be ‘a meaningful dialogue between ERISA plan administrators and their beneficiaries’ and that the Plan give a ‘full and fair review’ to an appeal of an adverse benefits determination.” A full and final review requires giving the claimant an opportunity “to submit written comments, documents, records, and other information relating to the claim for benefits” and provide the claimant with any new or additional evidence, as soon as possible, to give the claimant an opportunity to respond. In Dimry, not only did Bert Bell not provide Dr. Jackson’s report to Mr. Dimry, Bert Bell never informed Dimry that it was consulting Dr. Jackson or that he was issuing a report which it intended to rely on. The Court held that by excluding Dimry from the renewed review, Bert Bell was in violation of “the rule that there be a meaningful dialogue between ERISA plan administrators and their beneficiaries.”

Next, Dimry challenged Bert Bell’s finding that the objective medical evidence did not support his claims of neck and back pain. Although Dr. Jackson opined “that Mr. Dimry’s pain complaints could be accurate despite not being fully supported by the objective medical evidence given the nature of his impairment,” Bert Bell made no attempt to follow up with Mr. Dimry’s complaints of pain. The Court agreed with Dimry that requiring objective evidence to support his pain complaints was “illogical and without support in inferences that may be drawn from the facts in the record.” First, the Plan did not contain language limiting benefits to claimants that can provide objective evidence to support subjective complaints of pain. Second, the Court found that while Bert Bell “may consider the lack of objective medical evidence in making a benefits determination, ‘reliance on objective evidence can be problematic for medical conditions that are not amenable to objective verification.’”

Lastly, Dimry insisted Bert Bell abused its discretion when it failed to acknowledge Mr. Dimry’s social security award. In response, Bert Bell attempted to assert the following justifications for disregarding the SSA’s award decision: First, the SSA was somehow incomplete as it did not have and/or consider the Plan’s physician’s reports when it made its determination. However, the court did not find this argument convincing. Instead the court found Bert Bell “acted as an adversary, not a fiduciary,” and stated Bert Bell’s rejection of the SSA “is particularly striking where, as here, [Bert Bell’s] non-disability finding was based on the absence of objective evidence, and the [SSA] discussed the objective evidence in Mr. Dimry’s Social Security file at length – none of which Dr. Jackson reviewed.” Second, Bert Bell contended that since Mr. Dimry’s social security was rejected twice before it was granted, this constitutes evidence that reasonable minds could differ as to whether Dimry was disabled and precludes a finding that Bert Bell’s finding of no disability was arbitrary. The court again disagreed and explained, “[w]hile [Bert Bell] was not required to accept the [SSA’s] opinion, it had to consider it and explain why it was not persuasive.” Third, Bert Bell claimed that “[t]he Social Security decision turned on factors that are irrelevant to a finding of total and permanent disability under the Plan, such as [Mr. Dimry’s] education and work experience.” The court also rejected this argument stating that based on the relevant medical evidence, Mr. Dimry’s education and/or work experience had “nothing to do [with] whether the medical evidence fully supported Mr. Dimry’s pain complaints.” Finally, Bert Bell argued that it, unlike the SSA, was not required to give substantial weight to Mr. Dimry’s treating physician. While the court agreed that Bert Bell was not bound by the SSA’s treating physician rule, Bert Bell was also not allowed to simply discount the SSA’s ruling.

The lawsuit eventually resulted with the Court’s finding that Bert Bell had abused its discretion and remanded Mr. Dimry’s case back to Bert Bell for a renewed evaluation of his claim. The Court also stated that it “expects that once [Bert Bell] gives Dimry the full and final review ERISA requires, and eliminates the mandate of objective evidence – a mandate not in the Plan and not in Dr. Jackson’s reports – that Dimry will be found disabled under the Plan.

We often see LTD claims denied without a full and fair review provided to our clients. We often see plan administrators/insurers who use biased physicians who conduct cursory paper reviews, who wrongfully rely on the lack of objective evidence to deny LTD claims and who do not meaningfully address favorable SSA determinations. If you believe your LTD claim was denied without a full and fair review for any of the reasons discussed above, please contact us for a free consultation by calling our office at 949-387-9595 or completing the contact form on our website.

In this several-part blog series titled The Basics of an ERISA Life, Health and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death and dismemberment and disability claim, from navigating a claim, to handling a claim denial and through preparing a case for litigation. In Part Eight of this series, we discuss the impact of a finding of disability by the Social Security Administration (“SSA”) on a claim for disability benefits that was filed under an insurance policy governed by the Employee Retirement Income Security Act of 1974 (“ERISA”).

Social Security Disability Insurance (“SSDI”) is an important federal program available to many people who pay into the Social Security system. If a person becomes disabled, they are able to file a claim with the SSA for disability benefits. If the claim is denied, as many are, the claimant has the option of appealing the decision. An administrative law judge (“ALJ”) will hear the appeal and rule on whether the claimant is disabled and entitled to benefits.

When it comes to employees who receive disability policies with an insurance company, the impact on a disability insurance claim depends on the type of disability policy a person has. With respect to most individual disability policies (not issued through an employer), these policies serve as separate sources of funding should the person become disabled. Whether or not a person qualifies for SSDI benefits generally does not impact an individual disability claim. However, there are a myriad of different ways in which an SSDI decision can affect a person’s claim for group disability benefits issued through an employer.

The most significant impact an award of SSDI benefits can have on a group disability claim is that an award of SSDI benefits serves as strong evidence that the person is disabled under the group policy as well. The SSDI determination serves as strong evidence, in part, because the SSA has a more stringent standard for finding a claimant disabled than is found in most group disability policies. See Shaw v. Life Ins. Co. of N. Am., 144 F.Supp.3d 1114, 1135 (C.D. Cal. 2015) (“The Ninth Circuit has warned that ‘in some cases, such as this one, the SSA deploys a more stringent standard for determining disability than does the governing ERISA plan.’ Specifically, to receive Social Security disability benefits, Shaw had to show that she was ‘unab[le] to engage in any substantial gainful activity . . . .’ Under the Plan, however, Shaw had merely to show . . . .”); Bertelsen v. Hartford Life Ins. Co., 1 F.Supp.3d 1060, 1063, 1074 (E.D. Cal. 2014) (finding that “the SSA’s definition of disability [was] stricter than” the policy’s definition). Furthermore, the SSA is an independent entity that has no financial stake in the outcome of a claim for benefits. On the other hand, if a claim is approved by a disability insurer, the insurer will be negatively financially affected to having to pay the claimant. An SSDI benefits award is sufficiently strong evidence of disability that, should an insurance company deny a claim for group disability benefits after the claimant has been awarded SSDI benefits, the insurer must explain why it reached a different result. See Salomaa v. Honda Long Term Disability Plan, 642 F.3d 666, 679 (9th Cir. 2011) (“Evidence of a Social Security award of disability benefits is of sufficient significance that failure to address it offers support that the plan administrator’s denial was arbitrary, an abuse of discretion. Weighty evidence may ultimately be unpersuasive, but it cannot be ignored.”).

Claimants must be warned, however, that an award of SSDI benefits does not mean that the insurer must pay under a group disability plan. The SSDI award merely serves as strong evidence. See Maher v. Aetna Life Ins. Co., 186 F.Supp.3d 1117, 1126 (W.D. Wash. 2016 (“Maher later received an award of SSDI benefits which, although not binding upon the Court, is evidence weighing in favor of her meeting the Plan’s definition of disability.”). At times, the insurer and court may state that the evidence in the record before it is insufficient to establish disability regardless of what the SSA found. The court and insurer want additional evidence. Even in those circumstances, the SSDI process can help an insured. For example, during the process of acquiring SSDI benefits, the claimant may have undergone medical examinations. Submitting the results of these examinations to the insurer may help the insured establish entitlement to benefits under the group disability plan. Regardless of an award of SSDI benefits, a claimant must take care to build a strong record and submit all relevant evidence to the insurer while pursuing their group disability claim.

Of course, an unfavorable decision by the SSA can harm a claimant’s chances of obtaining SSDI benefits. Many judges look at such a decision and will be persuaded by the ALJ’s findings. While an ALJ’s decision does not control, there are exceptions to this general rule, but they are rare. See Parr v. First Reliance Standard Life Ins. Co., 2017 WL 1364610 (N.D. Cal. Mar. 31, 2017) (granting summary judgment for the insured in a dispute over group disability benefits even though the insured was denied SSDI benefits).

In addition to the evidentiary aspect of an award of SSDI benefits, an insured must also understand the financial implications of such an award. Most group disability policies include clauses that state that the insurance company may deduct the value of payments for SSDI benefits from any payments to the insured issued under the group policy. As such, it is in the insurer’s best interest to encourage a claimant to obtain SSDI benefits. Insurers not only encourage a claimant to apply for SSDI benefits, they often require that disability claimants apply. If they do not, then they will estimate an offset and deduct it from the amount of any benefits owed to the claimant.

A simple example helps to illustrate why an insurer would want such an award:

A claimant earns $100,000 a year. The group disability policy provides that the insurance company will pay 60% of that salary, $60,000, if the insured becomes disabled. That comes to $5,000 per month in group disability benefits. However, the person may also potentially receive $2,200 per month in SSDI benefits. Under the policy, the SSDI benefits are deductible. Therefore, the insurer need only pay $2,800 per month if the person is awarded SSDI benefits.

As the above example makes clear, there is a strong incentive for insurance companies to require insureds to seek out SSDI benefits. If the benefits are awarded, the insurer need only pay a fraction of the original benefits. If the SSDI claim is denied, the insurer acquires some evidence to assist it in denying the insured’s claim. In short, the SSDI process is a win/win scenario for the insurance industry. It is especially a win-win for the insurer when they encourage their claimant to apply for SSDI benefits, then they are awarded and then the insurer denies the disability claim anyway. Believe it or not, we see this occur often. That is when a disability claimant will need the assistance of experienced disability attorneys like McKennon Law Group PC.

Many employees are covered by group short-term disability insurance and/or group long-term disability insurance. These plans provide benefits to employees who cannot return to work because of illness or injuries that prevent them from performing their work activities. The Employee Retirement Income Security Act of 1974 (“ERISA”) governs most of these insurance plans. Unfortunately, sometimes an insured becomes disabled and must support his claim for disability benefits. The insured’s attending physician typically has examined the insured and determines that he cannot return to work. The insured will want to use his physicians’ certification of disability to support his disability by submitting it to his insurer. A common question is: Must an insurance company accept the treating physician’s opinion regarding the insured’s disability?

The answer is: not necessarily. The insurance company need not always accept and give credence to the treating physician’s opinion. The Supreme Court of the United States addressed this issue in Black & Decker Disability Plan v. Nord, 538 U.S. 822 (2003). In Nord, Kenneth Nord worked for Black & Decker. Black & Decker had a disability plan that provided benefits when an employee suffered “the complete inability… of a Participant to engage in his regular occupation with” Black & Decker. Id. at 825. The disability plan was governed by ERISA. Nord developed degenerative disc disease, which was confirmed by a Magnetic Resonance Imaging scan. Nord consulted with an orthopedist. Both his primary treating physician and the orthopedist agreed that Nord was disabled.

Nord applied for disability benefits, but Black & Decker denied his initial claim. Nord filed an administrative appeal. Black & Decker then referred Nord to a neurologist for an independent medical examination. The neurologist determined that whereas Nord did suffer from degenerative disc disease, he could still work with minor accommodations and pain medication. Black & Decker denied Nord’s administrative appeal.

Nord sued in district court to enforce his rights under ERISA. Both parties filed motions for summary judgment. The district court granted summary judgment for Black & Decker. On appeal, the Ninth Circuit reversed the district court. The Ninth Circuit relied on Social Security Disability law in determining that the treating physician must be awarded special deference and, if a plan administrator disagreed with a treating physician’s opinion, the administrator must provide specific reasons for its decision. The Ninth Circuit held that the specific reasons must be supported by substantial evidence.

The Supreme Court reversed the Ninth Circuit’s ruling. The Supreme Court explained that nothing in ERISA mandated that a treating physician’s opinion receive special deference from an insurance company. On the other hand, in the Social Security context, regulations did in fact require such a result. The Supreme Court explained that determining whether a treating physician should receive such deference was a question best left to Congress or an administrative agency. The Supreme Court overturned the Ninth Circuit’s ruling and remanded the matter for further proceedings. See id. at 834.

Just because an insurer need not give special deference to a treating physician’s opinion, that does not mean that an insurer can ignore the opinion. The Supreme Court expressed sympathy for concerns that treating physicians, “as a rule, have a greater opportunity to know and observe the patient as an individual.” Id. at 832. The Supreme Court also did not question the “concern that physicians repeatedly retained by benefits plans may have an incentive to make a finding of not disabled in order to save their employers money and to preserve their own consulting arrangements.” Id. (internal quotations omitted). The Supreme Court emphasized that “Plan administrators, of course, may not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.” Id. at 834. Nord makes clear that a treating physician’s opinion can serve as a significant piece of evidence, but the opinion may not, but often can, necessarily establish disability in of itself.

Courts have been critical of insurers that fail to adequately address a treating physician’s opinion. For example, in Yox v. Providence Health Plan, 659 F. App’x 941 (9th Cir. Sept. 9, 2016), the Ninth Circuit examined whether an insurer had abused its discretion in denying a claim for dental services under an ERISA plan. After the insurer denied the claim, the insured brought suit in district court. The district court found that the insurer had abused its discretion in denying the claim. The Ninth Circuit affirmed. The court based its holding on three grounds: failure to follow certain procedural requirements; failure to properly assess the substance of the insured’s claim, including the assessment of a treating physician; and the presence of a structural conflict of interest.

With respect to the insured’s treating physician’s clinical evaluation, the court stated that, “Moreover, [insurer] arbitrarily refused to address the clinical evaluation submitted by Yox’s treating dentist. When [insurer] did address the evaluation provided by another dentist, it discounted the dentist’s opinion as ‘insufficient’ without further explanation. [Insurer’s] conclusory opinion does not satisfy its duty under ERISA.” Id. at 944.

Other circuits have also expressed skepticism and criticized plan administrators that fail to give the proper weight to the opinions of treating physicians. See Evans v. Unum Provident Corp., 434 F.3d 866, 877 (6th Cir. 2006) (“The Supreme Court nonetheless admonished that plan administrators many not arbitrarily refuse to credit a claimant’s reliable evidence, including the opinions of a treating physician.”) (internal quotations omitted); Michaels v. The Equitable Life Assurance Soc’y of the United States Employees, Managers, and Agents Long-Term Disability Plan, 305 F. App’x 896 (3d Cir. 2009) (overturning a district court’s ruling in part for failing to credit evidence from a treating physician). Insurers cannot rely upon conclusory statements when addressing a treating physician’s assessment. The insurer generally must provide a more thorough and reasoned opinion as to why it will discount the treating physician’s opinion.

In fact, it is incumbent on an insurer’s reviewing doctors explain why his or her opinions differ from the physicians who actually examined the insured. If this is not done, the opinion should carry little weight with a court. See Carrier v. Aetna Life, 116 F. Supp. 3d 1067, 1081-1083 (C.D. Cal. 2015) (An insurer’s reliance on peer reviewers who present their opinions in a conclusory fashion, making it unclear how they reached contrasting opinions from those of the insured’s attending physicians, is improper, and such conclusions should not be relied upon over the opinions of the insured’s physicians).

Courts tend to give a great deal of respect to a treating physician’s opinions and without them, a disability claim may be denied. Having a strong certification letter from a physician can be very helpful, if not critical, to a disability insurance claim. If all of an insured’s doctors are in agreement that the claimant is disabled, then a court will likely be critical in its assessment of an insurer who denies that claim.

Most group long-term disability policies and employer-sponsored long-term disability plans include a provision called “Offsets,” “Other Income Benefits,” “Income Which Will Reduce Your Disability Benefit,” “Deductible Sources of Income” or a similar name. These provisions allow the insurer to reduce the monthly disability benefit that you would otherwise receive under the disability insurance policy by the amount of the “other income” paid to you during the same time period. Each policy is different, but the insurer is usually allowed to reduce your monthly disability benefit by the following types of “other income” you receive: (1) Social Security disability benefits; (2) California State disability benefits; (3) disability benefits paid under Workers’ Compensation laws; (4) retirement plan benefits funded by the employer that issued the group policy; (5) unemployment compensation; (6) amounts received in a personal injury lawsuit settlement or judgment for loss of earnings; and (7) amounts received as sick leave, salary continuation, vacation pay and personal time off.

For example, if your monthly disability benefit under your policy is $1,000 and you receive Workers’ Compensation benefits of $400 per month, your disability insurer would only be responsible to pay you $600 per month while you are receiving Workers’ Compensation benefits. Once you stop receiving Workers’ Compensation and, assuming you are still disabled, your monthly disability benefit would increase to $1,000.

Sometimes an insured receives so much in “other income” payments that it totals more than his or her monthly disability benefit. In that case, the insured is typically entitled to receive only a “minimum benefit,” the amount of which is defined in the policy. Many times the minimum benefit is the higher of 10% of the full monthly benefit or $100 per month.

Social Security disability benefits are probably the most important offset. Under most group long-term disability policies, the disability insurer is provided a dollar-for-dollar deduction of Social Security disability benefits received by their insured. The offset lasts through your Social Security retirement age (65 to 67 years old depending on your date of birth) if you are still disabled, much longer than Workers’ Compensation or State disability benefits, typically a maximum of two years and one year, respectively. Social Security can thus reduce your monthly benefit for the entire duration of your policy. Essentially, the United States government and your tax dollars end up paying for a good portion of your disability instead of the disability insurance company to which you or your employer paid premiums.

Social Security disability benefits typically increase over time to compensate for the effect of inflation on fixed incomes. This increase is called a “COLA,” or cost-of-living adjustment. Some states, such as California, have laws that prevent insurance companies from reducing your benefit if your Social Security disability benefit goes up. California Insurance Code section 10127.15 in fact provides that, “Any provision contained in a policy of disability insurance . . . for a reduction of . . . benefits during a benefit period because of an increase in benefits payable under the federal Social Security Act . . . shall be null and void . . .” Even if no law prohibits an insurer from reducing your benefit, insurance policies will often contain a provision stating that the insurer will not do so due to a COLA.

The fact that an insurance company is often not entitled to offset a COLA paid by the Social Security Administration can be very beneficial to an insured. If, for example, your policy’s disability benefit is $1,000 per month before offsets and you are receiving $400 per month in Social Security disability (leaving a net policy benefit of $600 per month and total income of $1,000 per month between both sources), and then you start receiving $50 more per month due to an increase in your Social Security for a COLA, your disability insurer cannot reduce the policy benefit by the $50 COLA increase. Thus, you would continue to receive $600 per month from your insurer (not $550 despite the $50 COLA), in addition to the $450 from Social Security for a net increase in your monthly income of $50 or, $1,050 per month total. That can be particularly important if you are young and permanently disabled. In such a scenario you may end up receiving numerous COLAs from Social Security over a period of decades substantially boosting your “other income,” but in many States such as California, the law will not permit your disability insurer to take advantage of that by reducing the policy benefit by the COLA amounts.

Group disability policies or plans almost always allow the insurer the right to be reimbursed for any “overpayment” it makes to its insured of monthly disability benefits due to your receipt of “other income.” An overpayment of benefits most often occurs if you are approved for Social Security disability. Approval by the Social Security Administration routinely occurs well after you apply for benefits because Social Security disability claims take a long time to process – you have to love our bureaucrats. At that time, the Administration will pay you a retroactive lump sum for past due benefits or “back-pay” (while your application was processed and also because federal law permits an award of Social Security benefits dating back as much as one year before you applied). And it will also start paying you a monthly amount on an ongoing basis. Thus, you may receive monthly benefits from your disability insurer for months or years without a reduction for Social Security because you would not have received Social Security yet. When you receive your lump sum award, however, your insurer will certainly “come knocking” to collect the overpayment it made in past months as a result of the retroactive Social Security back-pay. Your insurer has that right under the policy, though a skilled ERISA lawyer can sometimes avoid you reimbursing the overpayment based on various case law arguments, e.g. if the Social Security money you received was commingled with your other general funds, is not traceable to definitive property, or spent and no longer in your possession. See our article entitled, “Ruling Limits Insurance Company’s Ability to Collect SSDI Overpayments.”

Many group disability policies include language obligating the insured to pursue all “other income benefits” for which the inured may be eligible, including Social Security. If such benefits are not applied for, then under the provisions of most policies, the insurer has the right to estimate the insured’s entitlement to these benefits and then reduce the monthly disability benefit by the estimated amount. Usually, however, the insurer is not entitled under the policy’s language to reduce your monthly benefit by an estimated amount if you: 1) apply for all other income benefits to which you might be entitled; 2) appeal any denial to all administrative levels the insurer feels is necessary (the law requires only that you appeal to the administrative law judge level); and 3) sign the insurance company’s Reimbursement Agreement, which states that the insured promises to pay the insurer any overpayment caused by an award.

If your disability insurer denies your claim, but you were approved to receive disability benefits from Social Security, the State of California or Workers’ Compensation, often times your insurer will completely ignore that disability finding in its claim denial. Experienced ERISA attorneys such as the McKennon Law Group can use that to your advantage. Federal courts have ruled that where a disability insurance company denies a claim without explaining why its decision differs from that of the Social Security Administration, it tends to show that the insurer did not properly evaluate the insured’s claim.

If you are an employee covered under your employer’s group disability plan or policy and had your claim denied, or if you have questions about what sources of “other income” may result in an offset to your disability benefit, you should immediately contact the McKennon Law Group PC at (949) 387-9595 for a free consultation, a law firm specializing in ERISA insurance and employee benefits litigation. Let us decide whether your claim was wrongfully denied or whether your insurer is wrongfully offsetting your benefit, and let us see if we can assist you.

Navigating Social Security Disability and ERISA Benefits – What Should You Be Aware Of?